Qualified Small Employer HRA
New legislation has passed that allows an employer to reimburse for Individual Health Insurance Premiums on a tax free basis. This is a 100% deductible expense to the employer and tax-free to the employee. This new legislation bill is called the QSE HRA.
Here are some of the major points surrounding the QSE HRA.
- To Qualify for a QSE HRA:
- Must be between 2-49 FTE’s
- Does not offer group health insurance
- Must be solely funded by the employer
- No employee funding is allowed
- Reimbursement Maximums
- $4950 for individual coverage
- $10,000 for family coverage
- Amounts may be prorated for newly eligible employees
- Reimbursable Expenses
- Health Insurance Premiums on or off the Marketplace
- All other Section 213(d) expenses (Out of pocket medical expenses)
- Plan Design- Plan must be offered in the same terms to all “eligible” employees
- 30 hours/wk is the maximum eligibility criteria
- 25 years of age is the maximum eligibility criteria
- Maximum waiting period and entry period of 90 days
- Employees must have a minimum essential covered plan
- The regulations are very clear that every expense must be substantiated prior to being reimbursed
- 3 Notices are required to be given to all participants in the QSE HRA
- Summary Plan Description must also be provided
- Penalties will be enforced for not providing 3 required notices and additional penalties of $100.00/day/employee for non-compliance.